July , 2017
China’s gains with OBOR need not be India’s loss
16:51 pm

Debasis Mallick

History repeats itself. The Han dynasty started building a trade route from Xian, the ancient capital of China to the western world in about 100 to 150 BCE. The road connected the present-day countries of India, Afghanistan, Pakistan, Iran, Iraq, and Syria in South Asia and West Asia and Uzbekistan, Tajikistan, and Kazakhstan in Central Asia. On the western side, the road network extended to the Roman Empire. The idea ofOne Belt One Road” (OBOR) or what is commonly known as theBelt and Road Initiative” (BRI) was initiated by the Chinese President Xi Jinping in 2013 while visiting Kazakhstan. The OBOR includes a land-based economic silk belt and maritime route connecting various cities of Eurasia, which will be working as hubs for trans-shipment.  A wide network of roads will be developed as spokes around the hubs to ensure depth of connectivity. The two-day summit held on OBOR in the second week of May in Beijing included 64 countries covering 30% of world GDP and 45% of population. The attendees included the major economies like the USA, Germany, Japan, and Russia with the notable exception of India. India has been expressing grave concern over the development of China-Pakistan Economic Corridor (CPEC) connecting the route between China and Gwadar in southern Pakistan. The objection of India is not so much to the development of road from China to establish the link with the sea port at Gwadar facilitating direct connectivity with the European and African nations, but the usage of Gilgit- Baltistan of Pakistan-occupied Kashmir as part of the project.

Genesis of ancient silk route

The silk route developed two millennia ago has been the precursor of todays belt and road initiative of China. The trade and commerce grew exponentially between the countries along the silk route in ancient times. The constant movement of people ensured exchange of ideas, cultures, religions, arts, literature apart from trade and commerce. Though silk was the most important item tradedalong this route, numerous other items like precious stones, jewellery, hides and skin, art work, metal work, religious objects, spices and grains were also traded. One of the most famous innovative ideas promoted across the silk route was the art of making paper and development of printing press technology. The methodology of making silk from the silkworm cocoons invented by the Chinese was kept a well guarded secret for centuries till it was divulged in the 8th century to the western world by Indian traders. The Chinese traders took advantage of the fascination of the Romans for the silk garments and used to sell them at a hefty premium. The trading paths developed did not always follow one trail; rather the traders had a choice of a network of roads crisscrossing different regions of Eastern Europe, the Middle East and Central Asia. Perhaps they were intelligent enough to conceptualize the hub and spoke structure two thousand years back. Many renowned people travelled along this important trade route. Zhang Qian who was the pioneer of the Silk Road travelled twice to the western regions to bring back enormous information about Central Asia and Western Asia. The most notable traveller from Europe was Marco Polo. Marco Polo travelled to China in 1271 AD fromVenice through the land route. While coming back from China in 1294 he took the South China Sea Route.

OBOR initiative-the plan

The OBOR includes a land route running from Xian in the eastern part of China to Southern Europe via Netherlands and a sea route from Shanghai port to Venice via Vietnam, Malaysia, India, Sri Lanka, Iran, and Greece. Thus, the routes proposed are broadly the same followed by Marco Polo seven hundred years back. Along with the road and maritime route, construction of train links for faster movement of goods and services are also in the mega plan of OBOR. Train service from Chongqing, China to Duisburg, Germany has reduced the timefor movement of cargo from 36 days by container ship to 13 days by freighter train. In 2013, Hewlett-Packard began moving large freight trains of laptop computers and printers along this rail route. By reducing thetrans-shipment time by nearly a third, turnaround time of intermediate or final consumption of goods and services drops manifold, thereby increasing the level of global consumption and output. A sizable increase in GDP and employment generation has been forecasted by various research papers on OBOR on its successful implementation. The construction of CPEC across Pakistan ensures linkage of China with the Arabian Sea establishing connectivity with the far-flung West Asian and European countries in the shortest possible time. The CPEC is likely to reduce the transportation time from the factories of eastern China to West Asia from about twelve days to three days. Trans-shipment time apart, the construction of roads, ports and associated development activitiesalongside are going to transform the economy of Pakistan. Such a mega project, however, comes with a hefty price tag. PWC, in their report, mentioned that a commitment to the tune of $250 billion has already been made towards project OBOR. The estimated fund requirement till 2049, the 100th anniversary of Peoples Republic of China, when the project would have taken full shape, is $5 trillion.

Why is China interested in this mega project

Chinese growth has been phenomenal in the last two decades during which it has overtaken UK, Germany and Japan to become the second largest economy in the world. A statistical comparison between India and Chinas GDP growth during the last two decades reveals that in the year 2000 Chinas GDP was twice of Indias GDP and in 2014 it went up five times. However, of late, the country has started to witness a sluggish growth rate due to a variety of reasons including dwindling domestic consumption, increasing probability of trade restriction by the Trump administration, a weak Renminbi after significant devaluation, losing the comparative advantage of cheap domestic labour so far enjoyed in its export and substantial over capacity built up in its manufacturing sector. Chinese leadership has now started shifting focus from the domestic market to play a larger role on the international stage in order to establish itself as an economic power house in Eurasia and Africa. The country which was instrumental in spreading the philosophy of growth, assimilation of knowledge and technology through intercontinental trade two millennia ago has not changed its strategy, but this time its leadership plans to adopt it more vigorously in a structured manner involving all the stakeholders.  In short the Belt and Road strategy will be the driving force to catapult the country to a higher growth trajectory establishing its economic hegemony in the region.

Indias position

India boycotted the two-day conclave of OBOR organised in Beijing on May 14-15. India has reiterated that no country can accept a project that ignores its core concernson sovereignty and territorial integrity. Indias objection stems from the unilateral decision of China to build CPEC through the Gilgit-Baltistan corridor, which isclaimed by India as its integral part. India stands isolated as most of the major economies including USA and Indias neighbouring countries Bangladesh, Sri Lanka and Nepal decided to join the forum.

Is Indias decision of not joining theBelt and Road Initiative justified? Or, can India adopt a flexible approach? If we can keep aside the issue of Indias sentiment in not engaging it in the mutual discussion before using the territory of Gilgit- Baltistan for construction of CPEC, the bigger economic considerations in the long run, perhaps, justify Indias joining the project. First, there is no point in driving with our back to the wall, where we dont find any supporter. Second, India can play a constructive role onlyby joining the project rather than sitting on the fence and criticising without suggesting any alternative. As insider India can thwart any subversive role played by China. India can, in fact, play a larger role in getting commitment from China for pursuing an inclusive and consultative process in gradually resolving the differences. Third, India has the technical expertise, skilled manpower
and resources to finance and construct mega infrastructure projects in the countries which cannot afford to dothat themselves. This will add value and help to generate employment for the Indian workforce.

Though India decided to abstain from the Belt and Road Initiative of China, it became a full member of Shanghai Cooperation Organization (SCO) along with Pakistan in the recent meeting held on June 8-9 in Astana, the capital of Kazakhstan. SCO is another initiative of China to promote trade and commerce, security, energy, flow of capital among the countries of Central Asia. By becoming a member of SCO, India will have access to the resource rich region of Central Asia which will facilitate exchange of their natural resources like hydrocarbons and uranium with our expertise on IT, communications, space technology etc. India can also extend support in building massive infrastructure projects in these countries. Conceptually the BRI and SCO are intertwined. The member countries of SCO are also members of BRI. The proposed Silk Road Economic Belt from Xian, China to Rotterdam, Netherlands is, in fact, passing through Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Russia, all member countries of SCO. As such they all endorse the philosophy behind the BRI.


China and other countries in Asia are aware that in order to make the Belt and Road project successful from the geo-economic perspective Indias participation is extremely important. Mutual non-aggression, mutual non-interference in each others internal affairs and mutual benefit and peaceful co-existence should form the guiding principles behind a successful Belt and Road Initiative. Indias presence will give a sense of comfort to the smallernations. China has set the ball rolling. Its time for us to play the game.

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